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Ohio BWC Sued For Creating Privileged Employer Groups


Ohio BWC Created Illegal Preferred Risk Groups

Ohio BWC insureds file a huge lawsuit.  Business owners will try to convince a judge that Ohio plays favorites with some companies by offering unfair discounts on the money they must pay to the state’s fund for injured workers.

Map of Ohio BWC On Sky Graphic

Attorneys representing several businesses, including a sandwich shop and a copper tube manufacturing firm, plan to ask a Cuyahoga County judge on Tuesday to bar the BWC from using the rate-setting system.

Bureau officials say recent changes they made to the system will improve the fairness of the rate-setting system to make Ohio attractive to business investment.

At issue is the bureau’s practice of offering discounts of up to 90 percent – and 85 percent next year – for business groups with records of workplace safety. The lawsuit contends that businesses outside such groups are subsidizing the injured-worker system.

The lawsuit could affect 85,000 businesses that pay non-group rates. The lawsuit claims such non-group employees pay more than $200 million to subsidize 98,000 group-rated employees.

Hand Presenting Line Graph Ohio BWC Employee Salary

An example of the premium overcharging by the Ohio BWC of a doughnut business of 35 years:

  • Paying $800 yearly to insure four full-time employees and nine part-timers
  • Two injury claims five years ago involving falls on wet floors. One was minor and one required surgery.
  • The two claims caused the Workers Comp premium to rise to $10,000 as the company was removed from the preferred groups.
  • That is a 1,250% increase in premiums!

The lawsuit contends the bureau tries to anticipate what will happen in the coming year when setting rates rather than following the law and applying the workplace experience of the past year to premiums.

Businessman Reaching Ohio BWC Financial Goals Vector Image

James Barnes, the agency’s chief legal officer, said the bureau has worked over the past year to refine rate-setting. “These steps are part of a deliberate and comprehensive effort to make rates and premiums even fairer and more accurate for all employers,” he said in a statement.

Before the December decision to cut discounts, the bureau acknowledged that the set-up it had in place was handsomely rewarding groups of businesses with spotless safety records that banded together into coalitions or associations but hurt companies that experienced even one serious accident.

A third of the 6,800 businesses that lost their group rating in 2006 because of a serious accident or death involving an employee either stopped paying insurance or filed for bankruptcy, according to the bureau.

Stuart Garson, an attorney for the companies challenging the workers’ comp bureau, said the agency had the right to consider safety records in setting premiums, but said its rate-setting formula wasn’t fair to all employers.

BWC handled nearly 172,000 job-injury claims last year, including 176 work-related deaths and about 10 percent of claims were dismissed. In 2006 it paid out more than $1.9 billion in benefits and collected more than $2.1 billion from employers.

Next Up – What is the Real Problem Here? I have posted it numerous times. Coming Soon – I will see how the Ohio BWC formulas compare to other states.

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James J Moore - Workers Comp Expert

Raleigh, NC, United States

About The Author...

James founded a Workers’ Compensation consulting firm, J&L Risk Management Consultants, Inc. in 1996. J&L’s mission is to reduce our clients’ Workers Compensation premiums by using time-tested techniques. J&L’s claims, premium, reserve and Experience Mod reviews have saved employers over $9.8 million in earned premiums over the last three years. J&L has saved numerous companies from bankruptcy proceedings as a result of insurance overpayments.

James has over 27 years of experience in insurance claims, audit, and underwriting, specializing in Workers’ Compensation. He has supervised, and managed the administration of Workers’ Compensation claims, and underwriting in over 45 states. His professional experience includes being the Director of Risk Management for the North Carolina School Boards Association. He created a very successful Workers’ Compensation Injury Rehabilitation Unit for school personnel.

James’s educational background, which centered on computer technology, culminated in earning a Masters of Business Administration (MBA); an Associate in Claims designation (AIC); and an Associate in Risk Management designation (ARM). He is a Chartered Financial Consultant (ChFC) and a licensed financial advisor. The NC Department of Insurance has certified him as an insurance instructor. He also possesses a Bachelors’ Degree in Actuarial Science.

LexisNexis has twice recognized his blog as one of the Top 25 Blogs on Workers’ Compensation. J&L has been listed in AM Best’s Preferred Providers Directory for Insurance Experts – Workers Compensation for over eight years. He recently won the prestigious Baucom Shine Lifetime Achievement Award for his volunteer contributions to the area of risk management and safety. James was recently named as an instructor for the prestigious Insurance Academy.

James is on the Board of Directors and Treasurer of the North Carolina Mid-State Safety Council. He has published two manuals on Workers’ Compensation and three different claims processing manuals. He has also written and has been quoted in numerous articles on reducing Workers’ Compensation costs for public and private employers. James publishes a weekly newsletter with 7,000 readers.

He currently possess press credentials and am invited to various national Workers Compensation conferences as a reporter.

James’s articles or interviews on Workers’ Compensation have appeared in the following publications or websites:

  • Risk and Insurance Management Society (RIMS)
  • Entrepreneur Magazine
  • Bloomberg Business News
  • WorkCompCentral.com
  • Claims Magazine
  • Risk & Insurance Magazine
  • Insurance Journal
  • Workers Compensation.com
  • LinkedIn, Twitter, Facebook and other social media sites
  • Various trade publications


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